Statistical inference in social networks: how sampling bias and uncertainty shape decisions

Andreas Bjerre-Nielsen and Martin Benedikt Busch

Papers from arXiv.org

Abstract: We investigate how individuals form expectations about population behavior using statistical inference based on observations of their social relations. Misperceptions about others' connectedness and behavior arise from sampling bias stemming from the friendship paradox and uncertainty from small samples. In a game where actions are strategic complements, we characterize the equilibrium and analyze equilibrium behavior. We allow for agent sophistication to account for the sampling bias and demonstrate how sophistication affects the equilibrium. We show how population behavior depends on both sources of misperceptions and illustrate when sampling uncertainty plays a critical role compared to sampling bias.

Date: 2022-05
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2205.13046 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2205.13046

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().